There was lots of speculation that he FED might lower rates 1/4 % but they are holding firm and rates will stay where they are.
This brings out a lot of strange speculation about loans, the real estate market and the general economy. In our local area.. rates have gone up slightly, the real estate market continues to hold steady, and the jobs market seems to be doing just fine.
Lenders will be a bit more conservative about buyer qualifications on a purchase loan and when making refinancing loans. But it doesn't mean money has dried up and no loans are being made. It just means you will need either a downpayment or some significant resources if you want 100% financing. Neither are new ideas in the Beach Cities.
Contrary to many views most people who bought a home in the last few years in the Beach Cities had a downpayment and did not use sub prime financing. Also contrary to many views most buyers bought a home to live in not to flip. Less then 4% of the homes sold in Los Angeles County were sold to investors who were flipping them.
If rates go up significantly it will have an effect on the housing market but no one knows for sure where that line is.. could be at 7.5% or 8% or it could be less say at 7%. What I do know is that
back in the now glorious days of the 80's.. where some believe real estate prices should and will be again.. interest rates were in double digits. I wonder if people truly want to see a return to all of the aspects of that market( very high interest rates and significantly lower salaries) or if they really believe they will get low prices with their current salaries and low rates.
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